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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

“An economy can only sustainably spend what it generates in surplus. The U.S. has been exchanging paper with funny green ink on it for real stuff, far in excess of the surplus generated by our own labor and production. That is our trade deficit. To extend “aggregate demand” to the moon, we borrow trillions of dollars via Federal deficits to fill the gap left by imploding consumer borrowing. This is not spending a surplus we have earned, it is borrowing against future surpluses, surpluses of national income which we are now committing to debt service.

Future generations won’t get to spend their surplus; they will have to devote it to servicing the debts we have gaily borrowed and blown on digging holes and refilling them, part of our worship of the magical painted rocks of our false and hollow religion, Consumerism. ”

“The consumer-debt-based economy is toast, but everyone’s too terrified by its demise to acknowledge this reality, never mind consider a new model. The entire creaking economy is based on a few ideas which no longer work:

1) Create “aggregate demand” (i.e. consumer demand, which then creates business demand) and the economy “grows,” people are hired and get paid, and that’s good.

2) When consumer demand slumps because people are over-indebted and can’t afford to buy more of anything, then “stimulate” demand with massive Central State spending to replace the vanished private demand.

3) Demand is endless. You can never have enough stuff, food, vacations, education, healthcare and toys. Give people free money, or the ability to borrow nearly-free money, and they will spend, spend, spend. This creates “growth” which is always good.

A funny thing happened on the way to the infinite demand/consumption model–or actually, two things:

A. People borrowed all they could afford, and then borrowed more. Now they can’t borrow any more, even if the interest rate is low. By some estimates, American consumers need to pay down $4 trillion in debt just to restore the income-to-debt ratios of the early 1980s, never mind the early 1960s.

B. Infinite demand met marginal return in a dark alley, and infinite demand is in the gutter, whoozy and bleeding profusely.”

Yes. These rotten union employees making $50k a year plus bennies are a disease and need to be put in their place. I mean seriously, who do they think they are?
On the other hand, companies on the verge of death after failing at their supposed field of expertise need government funds so they can pay bonuses to their top brass. They were doing god’s work.

RE:BillE @ 4 – I’ve never been a fan of unions ever since my “incident” with the City of Seattle changing a locker room shower head on my own at Queen Anne Pool back in college. My “efficiency” turned into a sit down with a manager who said they were receiving heat because it was a union job. So, a complaint from a customer that a shower head was defective and that I fixed in about 15 minutes turned into a Union issue.

RE:S-Crow @ 5 – Unions destroyed the American auto industry and Detroit. Obama bailed out GM to help the unions out and not the shareholders. Unfortunately since the population in Detroit has dropped 25 percent this is what happens. The city is imploding and the bills are not. The city pumps approximately 15 percent of their pay rate away to fund their retirement plan. What private company does that? Private companies are all dropping retirement plans and switching to 401k’s as the retirement plan where the employee funds most of their own retirement.

RE:Scotsman @ 10 – You’ve hit the nail on the head! I wonder if we can petition Obama to release the details of his behind closed doors meetings with the banksters, a la Cheney with the oil barons. Well, maybe not. It is not as if Obama campaigned on increased transparency.

RE:Scotsman @ 10 – I skimmed that article earlier. The layoffs are apparently mainly related to pulling out of certain unprofitable areas entirely.

In my experience (not as an employee, but working with them as a service provider), HSBC is not a well-run company. It may make money, but it does not invest in its employees, so eventually it will probably reap what it’s sown. That may be at least partly what’s happening now. If they could hire robots, they probably would. Although they likely would cut costs on maintenance of said robots, and/or outsource them to Antarctica and break them. Not a company I would bet on for long-term health, unless they get lucky or make some serious changes.

This country will go bankrupt for the simple reason that the political class will never be incentivized to make the required changes. For all the talk about how the current debt limit deal will cut spending, it won’t. Any action planned for more than a year or so out is useless. For proof, let’s go back 10 years and look at what the CBO said would be the situation now. They only “missed” by $12T- almost the entire national debt:

“In January 2001, CBO’s baseline projections showed a cumulative surplus of $5.6 trillion for the 2002-2011 period. The actual results have differed from those projections because of subsequent policy changes, economic developments that differed from CBO’s forecast, and other factors. As a result, the federal government actually ran deficits from 2002 through 2010 and will incur a deficit in 2011 as well. The cumulative deficit over the 10-year period will amount to $6.2 trillion, CBO estimates—a swing of $11.8 trillion from the January 2001 projections”

RE:Scotsman @ 3 – Actually, that’s fairly close, but I think you miss the point of increased government spending during the current recession.

Yes, American consumers racked up way too much during the last boom. Wages stagnated, and credit made up the gap. You’re absolutely right about that being the source of the problem.

But what’s the current problem? The numbers say it, surveys of businesses say it: demand is down. It doesn’t matter how high your margin is or how low your taxes are, if you don’t have more customers you won’t hire more people or expand operations. And demand continues to be down because, well, it’s a recession, and in a recession everyone makes the entirely logical choice to cut back on personal spending, which reduces aggregate demand. What makes this recession particularly long lived is that there’s a huge overhang of household debt, and of people are choosing to pay off those debts prior to increasing spending. Of course, with the current unemployment rate as high as it is, a lot of people don’t have money to pay off debt with, if they even have money to pay their current bills.

And look, you’re right that we can’t spend and borrow forever. But the correct policy is a fairly common sense counter-cyclical policy. Borrow money and increase spending during recessions to make up for the shortfall in demand, and cut spending when private industry starts to bounce back (increasing government spending during boom times can crowd out private investment or raise rates, which isn’t the case during recessionary times) and pay down the debt.

Yes, we screwed up the boom times by increasing spending instead of cutting back. But that doesn’t mean we should also screw up policy during the down times by introducing austerity.

In other words, our country has dramatically high unemployment, deferred infrastructure maintenance somewhere north of $2 trillion that people could be employed fixing, a massive overhang of household debt that people need jobs to pay off, and investors are literally willing to pay us to borrow their money!.

Yes, we have a long term debt problem, but at this point in time it’s pure insanity not to be borrowing and spending– just as it was insanity to borrow and spend during the boom instead of balancing our budgets and paying down our debts.

“Yes, we have a long term debt problem, but at this point in time it’s pure insanity not to be borrowing and spending”

No, the time when that might have worked has passed. We are now at the point where the only option is to take the hit and start over.

You can’t just keep putting the inevitable off to tomorrow- it is, after all, inevitable. Tomorrow is now. The choice is gone. Time to pay up. When the marginal productivity of new debt is negative, more debt is poison, not a cure.

RE:Scotsman @ 18 – Karl more frequently is letting his ideology thwart his logic. Today he is trying to rally his readership against repeal of the Bush tax cuts. Yes, the repeal will certainly harm the average American. Average American hedge fund owner, that is. And the rabble that are his readers seem to be composed signifcantly of the low information reactionaries one hears about.

RE:Scotsman @ 18 – Well, I’m not familiar with that individual’s blog (he appears to be a retired pilot who runs a couple of aviation related businesses and wrote an aviation themed “grow your wealth!” type book), but although he cites the source of the data, I’m rather fuzzy on what exactly he’s doing with it. I loaded up the St.Louis FRED graphing site and tried loading change in GDP/change in federal government debt, and it comes up with nothing even remotely similar to his results. Change in GDP/change in household debt is a bit more similar to what he shows (not surprising– he seems to be summing together both private sector and government debt, which would be incorrect– those are very different things as the government can borrow on much different terms than individuals can.), but it only shows a downward trend if you graph it in dollars and fail to adjust for inflation.

Anyway, I’m not exactly sure what you mean by “time to pay up.” I hear that a lot, and it’s always said as though it’s an appeal to morality. We need functional solutions that produce the best possible short and long run outcomes, not appeals to pain. This isn’t your typical V-shaped recession, and it’s not going to just get better on it’s own– not for a long, long while, anyway: http://cr4re.com/charts/chart-images/EmployRecessJune2011.jpg

Look, you’re essentially arguing that in order to produce a long term deleveraging, we have to cut now. We both agree that deleveraging is necessary in the long run, but you haven’t shown that it has to happen now, at the very moment it will be most painful in both economic, fiscal, and social terms.

“An economy can only sustainably spend what it generates in surplus. The U.S. has been exchanging paper with funny green ink on it for real stuff, far in excess of the surplus generated by our own labor and production. That is our trade deficit. To extend “aggregate demand” to the moon, we borrow trillions of dollars via Federal deficits to fill the gap left by imploding consumer borrowing. This is not spending a surplus we have earned, it is borrowing against future surpluses, surpluses of national income which we are now committing to debt service.

Future generations won’t get to spend their surplus; they will have to devote it to servicing the debts we have gaily borrowed and blown on digging holes and refilling them, part of our worship of the magical painted rocks of our false and hollow religion, Consumerism. ”

1. To extend “aggregate demand” to the moon, we borrow trillions of dollars via Federal deficits to fill the gap left by imploding consumer borrowing

no we don’t. we borrow that because we had a drastic drop in revenue brought on by the
great recession and all the bush spending/tax cuts. we basically have ZERO stimulus spending right now.

2. they will have to devote it to servicing the debts

wrong. our debt service hasn’t been this low as a percentage of GDP since the 1970s.

two giant fails! good job.

3. blown on digging holes and refilling them, part of our worship of the magical painted rocks of our false and hollow religion, Consumerism. ”

this makes zero sense. first he conflates stimulus and consumerism which is nonsensical. the only reason we could have(and needed) stimulus is because people are CUTTING BACK on consumerism and saving(buying treasuries). we aren’t digging holes and filling them up again. that’s just a strawman. we have serious infrastructure problems in this country.

This country will go bankrupt for the simple reason that the political class will never be incentivized to make the required changes. For all the talk about how the current debt limit deal will cut spending, it won’t. Any action planned for more than a year or so out is useless. For proof, let’s go back 10 years and look at what the CBO said would be the situation now. They only “missed” by $12T- almost the entire national debt:

“In January 2001, CBO’s baseline projections showed a cumulative surplus of $5.6 trillion for the 2002-2011 period. The actual results have differed from those projections because of subsequent policy changes, economic developments that differed from CBO’s forecast, and other factors. As a result, the federal government actually ran deficits from 2002 through 2010 and will incur a deficit in 2011 as well. The cumulative deficit over the 10-year period will amount to $6.2 trillion, CBO estimatesâ��a swing of $11.8 trillion from the January 2001 projections”

This country will go bankrupt for the simple reason that the political class will never be incentivized to make the required changes. For all the talk about how the current debt limit deal will cut spending, it won’t. Any action planned for more than a year or so out is useless. For proof, let’s go back 10 years and look at what the CBO said would be the situation now. They only “missed” by $12T- almost the entire national debt:

“In January 2001, CBO’s baseline projections showed a cumulative surplus of $5.6 trillion for the 2002-2011 period. The actual results have differed from those projections because of subsequent policy changes, economic developments that differed from CBO’s forecast, and other factors. As a result, the federal government actually ran deficits from 2002 through 2010 and will incur a deficit in 2011 as well. The cumulative deficit over the 10-year period will amount to $6.2 trillion, CBO estimatesâ��a swing of $11.8 trillion from the January 2001 projections”

RE:Spherical @ 17 –
I think the big problem is that when times were good, when government ought to have been getting smaller, they were spending like a bunch of drunken sailors.
Other than that, you’re right. There’s no doubt in my mind that this debt deal will result in a higher unemployment rate and push the country towards an almost inevitable double dip recession.
Of course, my feeling is that a lot of Republicans know this and don’t care. If creating more economic misery means that they’ll grab the White House in 2012, then it’s worth it to them.
The people with their little wants and needs don’t matter, only their votes.

Ummm, yes. And you still missed it. The point is that they will never balance the budget, let alone reduce the debt. And with the debt growing faster than the economy that supports it, eventually the debt overwhelms the underlying system.

And austerity isn’t about prosperity- it’s about reaching sustainability, admittedly at a lower standard of living. You can’t have it all, especially when others are paying for it. But stability at a lower standard of living beats anarchy. Simple as that.

“you haven’t shown that it has to happen now, at the very moment it will be most painful in both economic, fiscal, and social terms.”

It has to happen now because the Keynesian stimulus solution isn’t working. It can’t work. There’s an upper limit to the amount of debt a system can support, and we are pretty much there. It happens now because we don’t really have a choice. From where we are we can delay, but we can’t fix the underlying system- it’s past the tipping point.

Think of it this way. If you make $50k and have $1M in debt you’ll never be able to pay it off. Now you do have $5k left on one credit card, and that will carry you for a month or two, but in the end you’re going bankrupt. That $5k you can borrow isn’t going to fix anything, is it? Same for the U.S. If you think putting the pain off for a year or two means less pain, you’re wrong. It may be less for you personally, but for the system it will only increase. In my example, by putting it off one more lender is now out the $5k you borrow. That’s more pain for the whole.

Ira, too many still think there’s some magical solution, a way out. To my mind democrats want to pretend there isn’t a problem and the old ways can carry on forever. Republicans want to stop the run away train, but don’t want to hurt their own interests in the process. Both are living a fantasy. Our fundamental expectations about what government provides and who pays are about to come up for serious review. I hope we end up striking a different balance with realistic expectations for all. But like I told pfffft above:

“. . . austerity isn’t about prosperity- it’s about reaching sustainability, admittedly at a lower standard of living. You can’t have it all, especially when others are paying for it. But stability at a lower standard of living beats anarchy. Simple as that.”

1) I think you use logic and put some thought to your views. You try to rationalize. It is what people at MIT or Princeton do. Instead you can think of new economy and new views on the economy. In the new economy you get into big debt and then this debt is forgiven for example.

2) I think you need to try to find innovative quick scams to get out of this mess. People want to consume. If you preach things like living within your means – you get a big reset. This is the outcome you try to avoid at all costs.

3) People want to have jobs and lots of money coming in. The US has the $ as the main currency in the world. It can use this to get out of debt.

4) Obama could start a positive PR campaign and start teaching new economics to all the people around the world.

5) Obama could put some pressure on the rating agencies so that they always give good ratings to US debts no matter what happens.

I think you really need to brainstorm and see how we can pull off another 20 years riding on a really big debt without any strings attached. We need 20-40 years to just cool down, chill and do some hiking.

RE:Trigger @ 33 – RE:Trigger @ 32 – I think you bring up some interesting points, although I believe they are “tongue-iin-cheek.”.

As moral hazard has been thrown out of the window and run over with a steamroller by the bank bailouts and lack of criminal prosecutions, why not bail out the consumer? The consumer is the real job creator.

More stimulus means an even weaker dollar and rising prices.

Regarding the stock market tanking, do you think Obama’s strategy of threatening to default helps instill confidence? A dynamic, inspirational leader he is not. Clueless about what to do, he is. The new Hoover he will become, I fear. Yoda has spoken.

“you havenâ��t shown that it has to happen now, at the very moment it will be most painful in both economic, fiscal, and social terms.”

It has to happen now because the Keynesian stimulus solution isn’t working. It can’t work. There’s an upper limit to the amount of debt a system can support, and we are pretty much there. It happens now because we don’t really have a choice. From where we are we can delay, but we can’t fix the underlying system- it’s past the tipping point.

1. “It has to happen now because the Keynesian stimulus solution isn’t working.”

2. “There’s an upper limit to the amount of debt a system can support, and we are pretty much there.”

you don’t understand a liquidity trap. a deleveraging economy keeps the government borrowing at very low rates. greece has reached the end point. the US two year yield closed today at 0.32%. that is less that 1/2 of a percent. the US is nowhere near there.

3. our interest payments/percentage of GDP is at 30+ year lows. at the very time you say our debt can’t be supported it’s actually at the LOWEST levels in 30+ years! it’s like you’re saying in the middle of a drought that we have too much water.

A is for Arab. The authoer got that part correct, and I is for Israel.

For the first time a President of the United States has taken on the Israeli coflict with Arab Nations. In the debt debate it was probably lost on you that http://mediamatters.org/research/201108020001 Netanyahu started talking about pre 1967 borders.

That is what Bret Stephens is upset about.

A lot of people are upset with Obama. His own party is turning on him which is also pointed out in the WSJ article. Obama has the same approval rating Reagan had.

We could blame Ronnie for all the things he did wrong, or praise him for setting this country on a course where we can talk about deficits, and see a solution.

Once again I want to point out that austerity is a condition forced on the goverments of Portugaul, Spain, Ireland, Italy, and Greece, by the banking nation of Germany. These countries should default, and return to currencies that make sense for them.

The Euro was a contrived currency that essentially wiped out these governments ability to provide services. Each of these countries needs to step in, nationalize the banks, forgive massive amounts of debt that consumers owe, and get on with building an economy.

This is a Real Estate blog. The promise to pay a mortgage may be a major inconvenience here in this country. These mortgages on property price, in most cases at least $100K to millions of dollars over value, is a drain on our economy that we, thank God, can walk away from. Europeans don’t have that choice.

Eventually all the debtor nations will “go Greece”. Of the 7 billion people on the planet, 80% live on $10 a day or less; 20% live on $1-2. I think that’s proof that there just aren’t enough resources/jobs to go around. Governments try to fill in the gap with debt, just to keep people fed and housed, instead of taking what they need.

In the US, more than 50 million are living on welfare and unemployment. People are spending as much as they can, and yet there will never be enough jobs to keep everyone busy. What is Obama to do? Cut them off, and wait for the inner cities to burn? Of course not. That’s why the debt ceiling debate was a sham. Both sides know they can’t vote for austerity.

The US will just go last, after the weak European countries, then France, the UK and probably China. We’ve traded our jobs for short-term profit and Chinese glass beads. We will probably muddle along like this for years, but eventually all debt ponzis crash. There will be a few years of austerity, and then a new start. As someone already said — if you’re doing okay, just go for a nice hike and watch the show. No need to be angry or sad. We’ve had a nice run.

Seeing as you both brought it up, I think Obama should have held out last time for an end of the tax breaks for the wealthy. It was a moment of weakness that may cost him reelection.

In my opinion he could have simply raised the yearly income levels for the end of the tax breaks for the wealthy. I mean he started at $200K per year, and he should have said $500K per year, or end the tax breaks for people making over $750K per year. He could have made the yearly income as high as he wanted to show the absurdity of that part of the debate.

Think, David- why doesn’t he do what you suggest? How many people from GS are in his administration? How did he come from total obscurity and minimal experience to be president? The guy is bought and paid for by the people who put him where they wanted/needed him.

We need cash infusion so that the Fed:
– buys stocks to get the Dow up
– get new tax credits/shelters or whatever to prop up housing prices
and finally
– the fed needs to quickly start ordering new industrial materials so that demand remains strong
– and it could start employing unemployed quickly so that they can get some cash and play with it.

What’s different about this market downturn? Interest rates are already at or near zero:

“In 2000, when the market tanked, the Fed Funds rate was 6.5%. The Fed immediately began cutting rates and eventually took them all the way down to 1%. (Where it left them for far too long, thus helping to inflate the housing bubble.)

In 2007, when the market began to crack, the Fed Funds rate was 5.25%. The Fed immediately began cutting rates and eventually took them all the way down to 0.25%. Where they have been as long as anyone can remember. And where they still are today, just as the market is beginning to crash again.”

The blue colors of this graph show when Democrats held complete control of Congress, while the white areas show when Republicans held complete control. The two purple areas show when Democrats controlled the Senate, as York notes above, and when Republicans controlled only the House

Ah, the Repubican employment plan! Pizza Hut, McDonalds, Wal Mart, Bank of America, all lay people off when they don’t get free tax credits, subsidies, or corporate welfare handed to them for providing minimum wage jobs.

Not to mention those very same communists complain that the minimum wage is too high.

You keep bringing up what is called corporate communism, like it is something for us to worship. It makes no sense. We give more to military contractors to build weapons we will never use than any other program we have. We give tax incentives to insurance companies for raising rates.

That blue and white Rorschach test is about as informative as the fact that I see an attractive girl (over the age of majority of course) in every ink blot when you see some kind of arachnid.

Is the graph supposed to show that Republicans create jobs?

Wait, I hear something. Did you say the white was the false employment booms of the tech and financial/housing bubbles? Or was that just mumbling from the other voice in my mildly psychotic inner dialogue? Anyway, it still looks to me like the white areas always end with all the lemmings going over the cliff.

And I’m sure I’ve seen that graph before. I think it was in my niece’s college dorm room, except it was a progressive propaganda poster illustrating how unrestrained markets shown by the white areas attract swarms of greedy idiots who make fundamentally unsound economic choices leading to exacerbated boom and bust cycles.

I’m pretty sure Pegasus has the same poster except his graphs white collar fraud peaking at the end of each white section.

Then again, if McCain had picked a running mate whose reading list included something other than pop-up books, he might have gotten the opportunity to show if he really was a super hero come to save us. (Although I doubt any of the Keating 5 could spot a festering financial black hole if it sat down at the table with them.)

RE:One Eyed Man @ 65 – Given what happened to the economy right before the election, if God had come down from heaven and ran for President as a Republican, he would have lost. McCain was in a tough fight and probably would have lost anyway, but the economic news ruined what little chance he had.

And speaking of President Obama, the S&P downgrade of US debt is going to really hurt him. He’s the first President to have this happen during his watch, and it’s reportedly because Congress did too much of what he wanted, not too little.

Seems like a rather political move by S&P. I really don’t see how the recent debt limit compromise could have possibly triggered that, since there was more spending approved prior to that time.

This is the kind of thinking that is dismissive to the real job of a Presidency.

Let’s say that Obama was there to be thrown under the bus by the Democrats, so Hilary could have a progressive to beat. Hilary made some bad moves, was too stiff, and again, like Gore, distant from Bill Clinton, who people like.

When the economy tanks under the Bush exit, and it’s clear McCain is insane, then no one wants the mess of presidency, so hey, why not the new guy?

Obama made a major mistake by spending money to further the Bush agenda of propping up banks. He could have dumped the whole economic mess right from the start, he didn’t, that took courage. He has stepped up the the plate repeatedly, and taken responsibility. He has made compromises he should have never made.

So looking forward, Obama has a Presidency of massive change. We’ll see what he does, but so far he has advanced an admirable agenda.

That’s government. Government needs to regulate the tax investment we have in public institutions. There’s a lot to be done, but the Republican insistence that if we just hand more money over to the financial markets they will take care of us has proved to be a lie.

Republicans are a tired record of giving our tax dollars away for no return. There is no benefit to the Republican agenda.

Democrats, at the very least, talk about spending money to feed the poor, promote the public welfare, and investment in infrastructure.

I guess that strategic default concept has really caught on. Everybody knows that we can afford to pay our debt, but we just don’t seem to want to. Sure, it might not really hurt borrowing rates right now, but doesn’t it make you proud as an Amerikan to know that S & P has slapped the potential welcher lable on you.

But, ironically it might be just what the economy needs to help with the deflation risk. After all, now the only way the Chinese and others can be sure to make up the risk of loss on all those bonds they hold is by charging a little more up front for the goods they sell us.

So cheer up. Maybe this will help the dollar win the currency destruction war. And I’m sure it won’t affect our reputation as the guiding light for truth and liberty in the world. Everybody knows that our word is our bond and who pays attention to the fact it was just down graded by S & P.

RE:Scotsman @ 70 –
From your article: “The downgrade was immediately pounced on by candidates vying for the Republican presidential nomination. Mitt Romney said the move was “a deeply troubling indicator of our country’s decline under President Obama,” while Jon Huntsman said it was due to spreading of a “cancerous debt afflicting our nation.”

Quite an irony since the rating has always been a reflection of the sovereign’s ability to pay, ultimately through taxation. What’s changed is the focus – now on the sovereign’s willingness to pay. S&P is simply formalizing the implications of a Republican Congressional majority.

RE:One Eyed Man @ 71 – Appreciate your wry comment on strategic default by the USG which so far has only been reflected in Obama’s comments regarding Social Security. That should be a lesson for the SS trust fund: never lend to a welcher.

Christina Romer, the former chair of Obama’s Council of Economic Advisers on Friday offered a rather strong opinion concerning the announcement by Standard & Poor’s that the credit rating agency downgraded America’s debt to AA+.

Debt ceiling debate caused a loss of our AAA rating according to Standard, and Poors. It makes no difference who was at fault.

The fact is that the single most important investment a family can make didn’t wait for many Americans until after the debt debate had ended.

Real Estate agents hawked over priced properties this selling season when they should have known that waiting was the best, the very best, strategy when advising people to buy.

We’re going to hear an ear full from agents out selling, I mean, who represented clients, to the best of their ability to collect commissions. Agents are going to say, Kary, that no one can predict the future, but we can certainly wait for pertinent news.

Debt debate was set for the end of July. A lot of sellers are very happy.

The blue colors of this graph show when Democrats held complete control of Congress, while the white areas show when Republicans held complete control. The two purple areas show when Democrats controlled the Senate, as York notes above, and when Republicans controlled only the House

RE:Scotsman @ 74 –
Great stuff, and followed by even better stuff from the resident posters. However, this can’t be too serious an issue as most of the posters were focused on even more tragic problems for America like….

having a half black president,
having a hip hop BBQ in the whitehouse (of all places), and
(heaven forfend), being unable to have the n-word in a Clint Eastwood “multicultural” joke.

RE:Scotsman @ 74 – Troubling, as her accuracy on matters economic is incredilby…..inaccurate. You can’t pick and choose the babble from these babblers to suit your point of view. Why that is quite, umm,…., political.

The U.S. Congress sets a federal budget every year in the trillions of
dollars. Few people know how much money that is so we created a
breakdown of federal spending in simple terms. Let’s put the 2011
federal budget into perspective:

It helps to think about these numbers in terms that we can relate to. Let’s remove eight zeros from each of these numbersand pretend this is the household budget for the fictitious Jones family.

•Total annual income for the Jones family: $21,700 •Amount of money the Jones family spent: $38,200
•Amount of new debt added to the credit card: $16,500
•Outstanding balance on the credit card: $142,710 •Amount cut from the budget: $385

The U.S. Congress sets a federal budget every year in the trillions of
dollars. Few people know how much money that is so we created a
breakdown of federal spending in simple terms. Let’s put the 2011
federal budget into perspective:

It helps to think about these numbers in terms that we can relate to. Let’s remove eight zeros from each of these numbersand pretend this is the household budget for the fictitious Jones family.

â�¢Total annual income for the Jones family: $21,700 â�¢Amount of money the Jones family spent: $38,200
â�¢Amount of new debt added to the credit card: $16,500
â�¢Outstanding balance on the credit card: $142,710 â�¢Amount cut from the budget: $385

a families budget has no relation to a government’s budget. apples to oranges.

you’re a deficit fraud anyway. You were for extending the $3 trillion dollars bush tax cuts for the rich that weren’t paid for.

“Jeffrey Immelt, the head of Barack Obama’s highly touted “Jobs Council”, is moving even more GE infrastructure to China. GE makes more medical-imaging machines than anyone else in the world, and now GE has announced that it “is moving the headquarters of its 115-year-old X-ray business to Beijing”. Apparently, this is all part of a “plan to invest about $2 billion across China” over the next few years. But moving core pieces of its business overseas is nothing new for GE. Under Immelt, GE has shipped tens of thousands of good jobs out of the United States.”

OK, let’s pretend it’s a household budget, and it’s you, and me. I want to hire 100 people by the end of this year, that’s my stated goal. I want my business to grow four times the size it is today.

What are your goals?

You see that’s what determines the budget. What the global economy is saying is that the economy is contracting. Is that true? or are there several billion more consumers in the world today compared to ten years ago?

Are you going to fire people to cut business costs? or hire more, because you need to make more money when times are tough? Are you going to advertise more? buy more equipment? and pay more in taxes as a result, or fold?

Over dinner tonight my wife and I are discussing where to set up business next, Spain, or Peru. I don’t know anything about Asia, but if it were an area of my interest I would probably set up shop there.

It’s a global economy. Jobs in China are another set of consumers, and they love American goods.

Let me give you an example, as I think you are a car buff. I was working with a woman from Thailand who wanted to buy American Harley parts for export. Couldn’t do it, tax, and tarrif. She could however sell after market design for manufacture in Thailand, however the Thais would rather pay full boat for actual Harley parts, packaged here.

How much business does the United States lose because we don’t have all the trade agreements we could?

“Jeffrey Immelt, the head of Barack Obama’s highly touted “Jobs Council”, is moving even more GE infrastructure to China. GE makes more medical-imaging machines than anyone else in the world, and now GE has announced that it “is moving the headquarters of its 115-year-old X-ray business to Beijing”. Apparently, this is all part of a “plan to invest about $2 billion across China” over the next few years. But moving core pieces of its business overseas is nothing new for GE. Under Immelt, GE has shipped tens of thousands of good jobs out of the United States.”

Yeah, even Krugman is admitting that it’s going to be a total disaster- that there is no recovery- just like I predicted!

“Paul Krugman: “I am not sure that the investors — there wasn’t going to be much money anyway. So I am not sure if the debt deal did it.

“What I think is that after all of the distraction about the debt fight, they sort of looked around and said, ‘What are the basics here? What are the fundamentals? What’s going on?’ They realized there is no recovery, there is no prospect of policy for recovery and they also were getting some blow back from the fact the Europeans are, you know, each unhappy economy is unhappy in its own way. And the Europeans are coming apart at the seams for their own reasons and that’s blowing back to us. So, bad stuff.”

Yeah, even Krugman is admitting that it’s going to be a total disaster- that there is no recovery- just like I predicted!

there is a recovery just not a very quick one. most numbers are pretty good it’s just that employment is very slowly coming back. we added over 100,000 jobs last month and the previous month was revised upwards.

if there is a problem it’s Europe and it’s some hedge fund getting liquidated.

1. economy is still adding jobs

2. yield curve is positive

3. leading indiactors aren’t saying recession

“there is no recovery- just like I predicted!”

no about 1 year ago you predicted economic disaster that did not happen. we’ve added a million or so jobs since then.

you predicted our government debt would sink us and in fact our interest payments as a percentage of gdp hasn’t been this low since the 1970s. In other words in my whole life our debt service hasn’t been this easy to manage…some disaster!

That’s a pretty funny web site, but I never heard the Head Line in the video. They probably assume that the people looking at the pictures will never read further than the Head Line, and would never be able to figure out how to play the video feed.

Oh yeah- it’s great! Markets have lost a couple trillion dollars, growth has slowed, lots of talk about the coming double dip, percentage of the population employed is hitting new lows, home prices continue to fall, no solution to the debt crisis in sight, etc. And like I said- even Krugman says it’s bad. That’s bad.

Oh yeah- it’s great! Markets have lost a couple trillion dollars, growth has slowed, lots of talk about the coming double dip, percentage of the population employed is hitting new lows, home prices continue to fall, no solution to the debt crisis in sight, etc. And like I said- even Krugman says it’s bad. That’s bad.

basically it’s just like last year in the Spring when everyone was predicted a double-dip. How did that work out?

definitely a tea party/republican downgrade according to standard and piss poors.

“From the S&P statement: “The political brinkmansh­ip of recent months highlights what we see as America’s governance and policymaki­ng becoming less stable, less effective, and less predictabl­e than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

You’re right- that is bad. Even giving you the benefit of an extra 6 months the picture has significantly deteriorated. Debt is up, growth is non existent, fewer people are employed while unemployment has run out for many, none of the structural problems have been addressed, and now the markets are getting hammered. We’ve seen 20% taken off the markets in the last two weeks- real wealth that people don’t have any more. Tonight’s Dow futures are already off hundreds of points. Obama is quickly proving himself a totally ineffective leader on pretty much all the important issues, so we can’t expect the ship of state to turn anytime soon.

“Keynesianism is blind to the black hole of debt: at a certain threshold (event horizon), the ability and/or willingness to borrow more vanishes. No amount of monetary easing or shoveling new money into banks can spark new debt and spending.”

definitely a tea party/republican downgrade according to standard and piss poors.

â��From the S&P statement: “The political brinkmanshÂ­ip of recent months highlights what we see as Americaâ��s governance and policymakiÂ­ng becoming less stable, less effective, and less predictablÂ­e than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

Huh? The last I checked, the coordinated efforts of 150+ privately-owned central banks had the greatest impact on the global economy.

The Tea Party does not own a single central bank. Riding the coattails of a paid-for anti-Tea Party blitz that’s circulating the Internet, I see… the communitarians are using central banker fiat money to further taint the Tea Party image, to ensure a communitarian makes it into the oval office in 2012 without a hitch.

Glad to see you folks are worried. You need more of that. You would think that with so much fiat, this would not be an issue, verdad?

RE:Blurtman @ 100 – I would agree, but I wouldn’t necessarily blame President Obama for that. He doesn’t control public perception and doesn’t control Congress. I’ve said all along that the stimulus should have been more concentrated–of shorter duration. The public doesn’t have the appetite for these things long term, and members of Congress react to that.

RE:Blurtman @ 11 – I think we are all in the business of finding quickie, easy solutions. They are the best.

Printing is easy. No biggie. Just print and you are done.

The hard part is what Scotsman is proposing. On top of this he requires people to watch the spending and really uncool stuff like this. Printing is easier. Out of cash – go get it from the printing press.

And then you can relax more and take in the sun rays. You do not have to worry or think too much.

There is no alternative to EURO and USD. Basically all people have to be happy with the printing. They can also relax knowing that they hold the right currencies.

“Keynesianism is blind to the black hole of debt: at a certain threshold (event horizon), the ability and/or willingness to borrow more vanishes. No amount of monetary easing or shoveling new money into banks can spark new debt and spending.”

definitely a tea party/republican downgrade according to standard and piss poors.

Ã¢ï¿½ï¿½From the S&P statement: “The political brinkmanshÃ�Â­ip of recent months highlights what we see as AmericaÃ¢ï¿½ï¿½s governance and policymakiÃ�Â­ng becoming less stable, less effective, and less predictablÃ�Â­e than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

Huh? The last I checked, the coordinated efforts of 150+ privately-owned central banks had the greatest impact on the global economy.

The Tea Party does not own a single central bank. Riding the coattails of a paid-for anti-Tea Party blitz that’s circulating the Internet, I see… the communitarians are using central banker fiat money to further taint the Tea Party image, to ensure a communitarian makes it into the oval office in 2012 without a hitch.

Glad to see you folks are worried. You need more of that. You would think that with so much fiat, this would not be an issue, verdad?

what? this is a tea party downgrade no doubt. S&P put it right in their report. it coudln’t be much clearer. the bankers were the one’s who wanted the tea party to back off.

RE:Blurtman @ 11 – I think we are all in the business of finding quickie, easy solutions. They are the best.

Printing is easy. No biggie. Just print and you are done.

The hard part is what Scotsman is proposing. On top of this he requires people to watch the spending and really uncool stuff like this. Printing is easier. Out of cash – go get it from the printing press.

And then you can relax more and take in the sun rays. You do not have to worry or think too much.

There is no alternative to EURO and USD. Basically all people have to be happy with the printing. They can also relax knowing that they hold the right currencies.

who is printing? I thought we had gigantic debts? which one is it this week?

by the way probably no president have ever done more to cut money from the budget than obama. he’s cut probably almost ten trillion.

Another perfect illustration of just how clueless and/or dishonest you are. First you claim Obama has made the cuts, $10T of them, then you cite $3.5T in federal budget cuts over a 20 year time span, (like those will realy happen) then you claim another $6T in indirect savings ( like those will really happen) and somehow think they are part of the budget. Here’s a clue- 3.5 is not equal to 10. If you can’t do basic math there’s no hope. ‘Nuff said.

You are a big part of the reason one can’t believe much of what is found on the internet. Maybe you are just a paid troll.

It oulines the basics, but never touches on the actual solution which is to make Social Security universal, like Health Care.

The United States is so afraid of communism, and socialism that it never looks at the drag poverty has on the economy. We are stuck with the idea that we need serfs to keep cheap labor hungry, and ready for any task, like going to war, or building new castles.

We have billions of people to provide cheap labor. We don’t really need to keep our own population in poverty, any more.

All of our budget problems can be addressed with cut’s, and taxes.

We need taxes that make sense. You can’t tell me that we just had an explosion of wealth, and yet they can’t afford to pay taxes. Some how our economy is declining while the number of people who are considered wealthy is growing. Corporate profits keep growing yet our government can’t balance a budget.

I’m thinking more about the millions of auto industry, and construction industry standards, and codes that prevent innovation. We call it safety, but it just perpetuates tired design. No one wants to innovate, because the people in government just don’t understand, and we have to get plans approved in order to build, construct, and progress.

What always gets me is that when we talk cutting government we start with EPA, which is designed for big ticket items. We never talk about those little agencies that are still regulating the buggy whip industry.

It’s all incremental, but we have the money. Our government can balance the budget, and honor our entitlement obligations.

RE:David Losh @ 130 – It is worthwhile to remind people that SS is quite solvent. It should not have lent its money to a borrower who is not.

SS “entitlement” reform will be a smokescreen to get an irresponsible borrower off the hook buy reneging on its obligations. It will not be done because SS is in any danger. It has close to a $3 trillion surplus!

RE:Blurtman @ 132 – It may be solvent, but wasn’t this last year the first time it didn’t bring in what it paid out? If I’m recalling correctly, that was more due to a poor economy than anything else, but the expected outflows are expected to increase well into the future.

To use an analogy, I might be solvent now, but that doesn’t mean I have enough set aside to retire at age 65. The question isn’t solvency, but whether there’s enough solvency.

Another perfect illustration of just how clueless and/or dishonest you are. First you claim Obama has made the cuts, $10T of them, then you cite $3.5T in federal budget cuts over a 20 year time span, (like those will realy happen) then you claim another $6T in indirect savings ( like those will really happen) and somehow think they are part of the budget. Here’s a clue- 3.5 is not equal to 10. If you can’t do basic math there’s no hope. ‘Nuff said.

You are a big part of the reason one can’t believe much of what is found on the internet. Maybe you are just a paid troll.

Clean energy is now creating more jobs for the energy produced than coal or natural gas, and solar energy is the fastest growing industry in the United States, according to industry and academic sources.

In the first quarter of this year, the solar industry installed 252 megawatts of electric capacity, an increase of 66 percent from last year. There are now almost 3,000 megawatts of solar electric power in the U.S, enough to power 600,000 homes. Production of panels went up almost a third.

“When demand for goods and services falls short of the economy’s ability to produce them, as is the case currently, increasing government spending can increase aggregate demand and thereby narrow the gap between the economy’s actual and potential levels of output,” Elmendorf writes.

Government intrusion into the economy and the markets have actually made things worse, not better. The economic stats confirm this assertion. The unemployment rate is higher, economic growth is lower (2007–2010 real GDP decreased at an annual rate of -0.3 %), and inflation rates have grown since the bottom of the recession. All we have to show for this intrusion into the economy by the government is a higher inflation rate.

What accounts for this mismatch between economic strategy and economic outcome? The old economic and financial models seem to be breaking down. They were designed to work in an economy that was unencumbered by debt. The consumer debt supercycle ended in 2008. We moved on to the government debt supercycle which will also come to an end. We are now entering the final stages of the endgame which will lead to an earth shattering currency crisis centered on the US dollar.

It is obvious that the US will be unable to “grow” its way out of its debt problems. To do that would take economic growth rates of 10% or more—these growth rates would have to be sustained for several decades.

The more likely approach is a combination of strategies that will involve spending cuts, tax increases, and a healthy dose of inflation. The US will likely be inclined to use the same strategy that it used to reduce our debt after World War II. Economists refer to this strategy as “financial repression.” Financial repression involves keeping interest rates artificially low and running a higher inflation rate. The artificially low interest rates enable the government to finance its deficits at an artificially low rate of interest. This reduces the size of the deficit and the interest costs the government has to pay its bond holders. At the same time, running higher rates of inflation allows the government to grow the economy in nominal terms (GDP increases as the cost of goods and services rise due to inflation), which reduces the size of the deficit when compared to the nominal value of GDP.

Government intrusion into the economy and the markets have actually made things worse, not better. The economic stats confirm this assertion. The unemployment rate is higher, economic growth is lower (2007â��2010 real GDP decreased at an annual rate of -0.3 %), and inflation rates have grown since the bottom of the recession. All we have to show for this intrusion into the economy by the government is a higher inflation rate.

Post hoc, ergo prompter hoc.
Common fallacy, or the first rule of Scottish economics?

Government intrusion into the economy and the markets have actually made things worse, not better. The economic stats confirm this assertion. The unemployment rate is higher, economic growth is lower (2007â��2010 real GDP decreased at an annual rate of -0.3 %), and inflation rates have grown since the bottom of the recession. All we have to show for this intrusion into the economy by the government is a higher inflation rate.

What accounts for this mismatch between economic strategy and economic outcome? The old economic and financial models seem to be breaking down. They were designed to work in an economy that was unencumbered by debt. The consumer debt supercycle ended in 2008. We moved on to the government debt supercycle which will also come to an end. We are now entering the final stages of the endgame which will lead to an earth shattering currency crisis centered on the US dollar.

It is obvious that the US will be unable to “grow” its way out of its debt problems. To do that would take economic growth rates of 10% or moreâ��these growth rates would have to be sustained for several decades.

The more likely approach is a combination of strategies that will involve spending cuts, tax increases, and a healthy dose of inflation. The US will likely be inclined to use the same strategy that it used to reduce our debt after World War II. Economists refer to this strategy as “financial repression.” Financial repression involves keeping interest rates artificially low and running a higher inflation rate. The artificially low interest rates enable the government to finance its deficits at an artificially low rate of interest. This reduces the size of the deficit and the interest costs the government has to pay its bond holders. At the same time, running higher rates of inflation allows the government to grow the economy in nominal terms (GDP increases as the cost of goods and services rise due to inflation), which reduces the size of the deficit when compared to the nominal value of GDP.

oh god this is so wrong. the government doesn’t keep anything artificially low. we have an oversupply of savings and we are in a liquidity trap. that’s why rates are so low. people are also afraid of the stock market.

Because it makes no difference how much the government invests, prints, or spends, that’s the end result of the liquidity trap you’ve mentioned a dozen times, twice here.

Our government can implement cost cutting, and tax increases to make this the last country standing in the currency wars.

There is really nothing to it, and the middle class would hardly feel a thing.

People have allowed me to throw around the word wealth, and single out the wealthy. No one challenges me. Why?

What is it about that 2% of the global population that we all allow them to run things? There are more of us than there are of them.

There was a long discussion on the radio about redistribution of wealth. Every body is against that because there is no accomplishment to getting a hand out. Over centuries it’s been proved that the 2% have that feeling of power, because they built wealth, or maintained it. They are the accomplished ones, that we all admire.

OK? Are you with me so far? That 2% has nothing to do with the governments. That 2% doesn’t need any thing. The government is there to keep the rioting to a minimum.

That’s where all of your theories go sideways. We have never had so much wealth. There is more than enough money to do everything, we just don’t have a plan.

I pick on Bill, and Melinda Gates, because they are a perfect example of misdirected wealth. Warren Buffet is another bafoon. The wealthy of the world are ridiculous. There is no leadership where it could do some good.

There is no military might, so government is a useless set of sabre rattlers.

So you should come up with some other idea about where the money is coming from to fix the damage that has been done by the politicians.

RE:One Eyed Man @ 158 – Don’t be silly. In just over a year the Supreme Court will uphold Obamacare, and that will free the way for Congress to pass all sorts of laws forcing people to buy things to improve the economy! :-D

RE:pfft @ 154 – That is a simple question, and as usual, the devil is in the details. If you USG seeks to purchase $1 billion of widgets from my hypothetical business, I might thank them for the order and produce the requested product in China. Sustainability is also an important metric. If I hired a US workforce to make the widgets, perhaps these folks would go out and buy houses. But once the USG order was filled, perhaps they would be laid off, and their homes foreclosed upon.

Overall, IMHO, it is best if the stimulus is sustainable and not funded through debt. One solution might be a positive trade balance, that is, demand for US goods and services which is sustainable employing US workers.

RE:Blurtman @ 160 – I still think the best solution is to repeal the corporate income tax. That would make doing business here more attractive, and I suspect that more would be gained in personal income taxes than lost in corporate taxes, especially after you consider the multiplier effect on spending.

RE:Kary L. Krismer @ 64 – Actually, you seem to me to have the opinion that corporations can do no wrong.

No, I just don’t have the simplistic, naive if not bigoted view that anything a corporation does is evil.

For example, a lot of people will complain about the profits of insurance companies in health care, when in fact their profits are minimal. Or my favorite was the morons in California complaining about their utilities during the energy crisis there, not realizing that their utility was buying $100 of energy and selling it for $50.

That’s misdirection. Profits of Health Insurance companies pale in comparison to the number of granite styled entrance ways into hospitals, or the price of medical equipment, or resale of medical equipment to the Third World, or what the cost is of setting up clinics in emerging markets, and the list goes on.

Corporations will only flow through profits to the lowest bidder. There is nothing that says the economy will benefit. If you’re not keeping track corporations are now entities, with rights.

It’s just my opinion that corporate culture is out of control. It’s a haven, a pirate cove, of under reported profits, and trickery. I don’t think giving corporations more of a tax break will benefit any one.

RE:Pegasus @ 170 – A CEO of a large investment bank commits massive fraud, enriching himself in the process. In this backwards country, the CEO uses his influence and connections to become the Secretary of the Treasury, where he then demands a blank check to bail out his former employer whose misdeeds have bankrupted the company. He also engineers a no prosecution policy, as if that were at all necessary anyway. He then works with the equally corrupt head of the country’s central bank to dump these bad investments on the general public. And the corrupt Congress mandates that fraudulent accounting practices be enforced, lest the truth become too visible.

In what backwards banana republic could such outrageous practices occur? Bolivia? No. Ecuador? No. Brazil? Heavens no. Give up? The answer: It is the United States of America.

Is this it? TNX dipped below 2%, within a few points of the all time GD low. Unemployment claims headed back up. Philly Fed index with a huge miss, -31 verses expectations of +3. Markets are diving, Europe is really hurting, especially their banks. Big O is on vacation.

RE:Pegasus @ 170 – A CEO of a large investment bank commits massive fraud, enriching himself in the process. In this backwards country, the CEO uses his influence and connections to become the Secretary of the Treasury, where he then demands a blank check to bail out his former employer whose misdeeds have bankrupted the company. He also engineers a no prosecution policy, as if that were at all necessary anyway. He then works with the equally corrupt head of the country’s central bank to dump these bad investments on the general public. And the corrupt Congress mandates that fraudulent accounting practices be enforced, lest the truth become too visible.

In what backwards banana republic could such outrageous practices occur? Bolivia? No. Ecuador? No. Brazil? Heavens no. Give up? The answer: It is the United States of America.

Sounds like Italy with Berlusconi… good role model for the US of A!?
Reminds me of an old joke:
In heaven: The French do all the cooking, the Germans fix things, the Brits run the police, the Swiss run the government and the Italians are the lovers.
In Hell: The Brits do all the cooking, the French fix things, the Germans run the police, the Swiss are the lovers… and the Italians run the government!

“If the federal government’s regulatory operation were a business, it would be one of the 50 biggest in the country in terms of revenues, and the third largest in terms of employees, with more people working for it than McDonald’s, Ford, Disney and Boeing combined.
Under President Obama, while the economy is struggling to grow and create jobs, the federal regulatory business is booming.
Regulatory agencies have seen their combined budgets grow a healthy 16% since 2008, topping $54 billion, according to the annual “Regulator’s Budget,” compiled by George Washington University and Washington University in St. Louis.
That’s at a time when the overall economy grew a paltry 5%.
Meanwhile, employment at these agencies has climbed 13% since Obama took office to more than 281,000, while private-sector jobs shrank by 5.6%.”

RE:Blake @ 175 – I had dinner with some old friends in Bezerkeley a few months back, and that was their conclusion, which they did not seem to think was all that bad. That is, that the USA becomes the new Italy.

This speaks directly to some of the issues raised in a previous discussion on tax rates across income/wealth spectrums. The world is full of self-serving wealthy people, including Warren Buffett. This is not the first time I’ve heard grumblings about his real motivation for leaving it all to a foundation.

As far as I know that the US defense budget is equal to the total defense budget of top 50 largest country in the world. Wow!!
I have heard all kind of theories related to the debts in this forum.
I am surprised that nobody touch this part. I guess that it’s the untouchable.

You’ve brought up a lot of great discussion points this past week. I think you said you did some home work, and this site is a departure for you.

There are a couple of things that go back to the military budget. Obama was elected because he said he would get us out of Iraq, and Afganistan. I heard a Republican refer to Afganistan as Obama’s war.

What I know is Osama bin Laden is dead, and another Al Quida leader in Pakistan is dead, as of this week end. The report from the military is that Al Quida is on the ropes. Wasn’t that the goal? There is also a transfer of $2 trillion in hardware from us, to the Iraqis, and Afganies. We need to end our involvement, in a timely manner.

We can redirect our military presense. The article you linked to is referring to the Panama Canal days. What’s interesting to me is that the transfer of the Panama Canal to Panama never resulted in the catastrophy that was expected. Panama seems to be able to operate the Canal just fine.

We can cooperate with foriegn governments without taking over. I think, in my opinion, Iraq, and Afganistan showed regime change doesn’t happen. Columbia is another United States military disaster. We can’t take kids, or insurance sales people, no matter how well trained they are, and put them in front of generational killers. A raid like against Osama, OK, but on the ground with people who kill for a living is really dicey.

IMO, the reason for this is that the US dollar comprises 60% of all reserve holdings in the 150+ privately-owned central banks worldwide. This has allowed the US dollar to be diluted/inflated into oblivion and it does not collapse, since it is the world’s reserve currency. The central banks will still hold and transact in US dollars, regardless, lending stability to the system.

Note that the shift away from the US dollar as the world reserve currency is well underway. the TBTF bailout money was primarily used to purchase infrastructure, land, and commodities overseas, in anticipation of a US dollar crash. This is a main reason why agricultural land and commodities are rising in value, worldwide (supply vs. demand).

The US-based military industrial complex is dependent on the stability of the US dollar and its status as the world reserve currency in order to continue military spending at the current levels. This status allows for great abuses of the currency — such as creating USD at will and then swapping it for hard assets.

Economist Michael Hudson has written extensively on this topic. He’s the guy who convinced Iceland’s government to default on their IMF loans. If you never heard of him you should introduce yourself.

I can guarantee you that the majority of people reading this will sweep it under the carpet because they have not heard about any of this before. Others will form small groups here in which they will work to destroy the perceived value of this information. Such trust in the mainstream media and the mainstream blogs is quite impressive — like a faith-based religion.